The Bangladesh Bank (BB) in a recent circular instructed the nationalised commercial banks (NCBs), including two specialised banks-- Bangladesh Krishi Bank and Rajshahi Krshi Unnayan Bank, to disburse farm loans among the farmers at 2 percent rate. There are also explanations in the circular on the ways and means of recovery and repayment of such loans and on how to coup with the financial losses resulted from such low lending rate.

The BB also asked the banks for preparing an annual disbursement target of the loan at the onset of the year besides ensuring monitoring of the loan after its disbursement.

In case of ceiling of loan for each farmer, the banks should follow the existing agricultural loan policy, the BB circular suggested, adding that the recipient's capability of repayment and tenure of receiving and processing application are some of the determinants for sanctioning loans.

According to the policy guideline, the listed banks will have to write to the finance ministry within a month after expiry of the financial year for adjustment of the losses they may face due to subsidised credit.

The guideline, however, warned against turning any loan fully or partially defaulted, affirming that such defaulted loan would not be entitled to low interest rate facility.

The banks have been given directives to submit detail particulars, including number of loanees and amount of loans and the time of approval, to the central bank for its perusal.

As per the directives, these particulars should name the crops for which the credit sanctioned, addresses of the loanees and the quantity of the lands to be brought under cultivation so that the central bank can assess the merits of the loans before reimbursement of losses.

Besides, the specific branches of the banks should send particulars to the loan monitoring cells at the head offices of the respective banks.

The banks themselves should also initiate necessary monitoring to ensure reaching out the loans sanctioned to the bonafide farmers.